The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 1. Учебное пособие

Staying Afloat

Acceptance of goods:

1.com. – the position when the buyer either agrees to take them from the seller and willingly pays for them, or if after a reasonable time he has done nothing to refuse them, he is considered to have accepted them and is therefore bound to pay for them.

2.advtg. – the willingness of consumers to buy a product.

Cheque, bkg. legally, a bill of exchange drawn on a banker. Payable on demand, in practice it is a direction in writing to a bank to pay a stated sum of money on demand to a named person or organization, or to his or their order, or to the bearer.

Syn.: check (USA).

Definitions of terms

Незавершенное производство – один из элементов обо-

ротных средств, стоимость всей не законченной к определен- ной дате продукции.

Валовая прибыль – разница между доходом и расходом без каких-либо вычетов.

Тратта; переводной вексель — безусловный письмен-

ный приказ кредитора должнику уплатить по предъявлении этого документа или в назначенный срок определенную сум- му денег предъявителю или указанному в тратте лицу.

Акцепт – согласие на оплату или гарантирование опла- ты денежных, расчетных, товарных документов или товара; форма расчета по ценным бумагам, товарным документам через кредитно-банковские учреждения.

Акцептованная тратта – переводной вексель, имеющий надпись акцептанта (банка) о согласии на его оплату.

Чек – документ, содержащий безусловный приказ вла- дельца текущего счета банку о выплате указанной суммы оп- ределенному лицу или предъявителю. Обычно используется для расчетов, погашения долгов.

For discussion

1.What does staying afloat require, especially in the longer term?

2.What helps sales to develop?

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3.How would you define a break-even point?

4.What do overheads cover?

5.Why is making up a business plan important9

6.When is a business plan produced?

7.What is the role of cash in a small business?

8.How should you deal with your customers?

9.What is important in dealing with your suppliers?

Summary

1.Перваястадиядлялюбогоновогопредпринимательства– это достижение точки безубыточности; после этого получение прибылейнеобходимодлядолгосрочноговыживания.

2.Следитезанакладнымирасходами– ониимеютнеприятную тенденцию возрастать с увеличением объемов продаж. Тем самымонипостоянноотодвигаютточкубезубыточности.

3.Контролируйте свой бизнес путем сравнения фактиче- ской деятельности с исполнением бюджета; старайтесь извлекать полезные уроки и планируйте наперед любые изменения в своем плане, которые необходимы.

4.Если вы нанимаете сотрудников, введите систему ежене- дельнойилиежемесячнойотчетностиипостановкицелей.

5.Контроль за наличностью поможет вам оставаться на плаву, пока не будет достигнута точка безубыточности.

6.Заставьте наличность работать на вас, т. е. если у вас есть сво- бодныефонды, поместитеихнасчет, приносящийпроценты.

7.Пользуйтесь своим банковским счетом как можно эф- фективнее.

8.Постарайтесь ускорить темп, с которым ваши объемы продаж обращаются в наличность. Используйте для это- го кредитный контроль и исследование потенциальных клиентов, предлагая максимально жесткие условия кре- дита, высылая счеты-наряды незамедлительно и отсле- живая просроченные счета.

9.Наиболее удачно развивающиеся малые предприятия применяют практику откладывания (задержки) выплат своим поставщикам на некоторое время в период своего становления.

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Keeping the Record Straight

Unit 9.

Keeping the Record Straight

Fate decrees that one of the least interesting business activities is also one of the most crucial for its continued success. Keeping records must rank fairly low in an entrepreneur's satisfaction rating. It is much more gripping to go chasing sales or to carry out a negotiation with a supplier, which will lower your costs. But a complete ‘seat-of-the-pants' approach to business will only keep you afloat in the short term.

If you hope to avert the dangers of sliding into failure, one thing you should try to achieve is not to allow yourself to be buried in a quagmire of bills, invoices and tax demands. Failure to organize your records from Day One may mean just that. However, it is never too late to start; so if you have been pushing aside that task, now is the time to tackle it.

Allowing yourself to drift into paper chaos is understandable. Discovering a system for organizing records which is suitable for your business can be difficult. Too simple a system for your particular business may mean that you cannot derive the information from it that you need. Too complicated a system may mean that you have to spend too much time keeping it up-to-date. There is no one system which will apply to all businesses. You may find that you need to adjust yours with the benefit of experience, until you have developed one that fits what you want.

Why you need Records

Good accurate records are needed for two extremely important reasons. First, records are needed to substantiate what is in the accounts.

One of the advantages of choosing to be self-employed or in a partnership is that your accounts do not have to be audited. But

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they must convince your tax inspector. If the accounts cannot be backed by written documentation, you may find yourself paying a higher tax bill than otherwise. Or, just as bad, your tax. inspector may launch an investigation into your business affairs. If you have a company, your accounts must be audited and so you need the back-up records to satisfy the auditor.

Accounts have to be prepared for every accounting period and sent to your tax inspector. The accounts for the self-employed should consist of details of sales and expenses. A balance sheet is helpful, but not essential (it is essential for a company). If your sales are under £10,000 a year your accounts as a sole trader or partner need consist only of a figure for sales, a figure for expenses and a figure for profit.

Second, accurate records are needed to help you know what is going on in your business. This, in turn, means you can keep better control and you can plan for the future. It is impossible to make realistic estimates and projections if the basic data is patchy and inaccurate.

Which Records?

The first and most important record you need is for cash. You need some wav of keeping information about payments into and out of your bank account and also any petty cash which you keep on the premises. The aim of your cash records should be to enable you to know at any moment how much cash you have.

For those businesses which do not sell all their goods for cash, your records will need to cope with keeping tabs on what people owe you and how long they have owed it. This allows you to forecast what money you will be setting in during the months ahead and enable you to chase debts which are overdue.

Most businesses will buy goods, services and raw materials from others. Unless you are forced to pay cash for all your supplies, you will need to organize the bills which you have to pay. Following on from this, if you keep stocks of raw materials or stocks of finished goods, you need to have a tally of what there is:

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Keeping the Record Straight

what has come into the business, what is presently held by the business and what has gone out.

Once you start employing people, your employee records need to be meticulously kept; in particular, the records which relate to your role as tax collector for the government need to be very well organized and kept up-to-date.

Finally, information about fixed assets, such as cars, equipment or property, needs to be recorded.

A very Simple System

If your business has only a few transactions, for example:

•it is very small, or;

•you sell only large items, or;

•you sell your time, for example, as a consultant.

the system you introduce can really be very simple, It would

indeed be a mistake to get bogged down in very complicated re- cord-keeping. Because it would take up a lot of time without improving the accuracy of your system. Complexities such as doubleentry book-keeping can be put aside. A couple of simple accounts books may well be sufficient. Being methodical is far more important than sophistication.

Cash

You will need a cash book. This should show the cash payments you receive and the cash payments you make. It gives a way of recording what you have paid into the bank and what you take out of it. The same cash book can also record your petty cash position.

Diagram 3 gives an example of a way of setting up the cash book. As you can see there are two sections: one for recording cash receipts and one for wording cash payments. The cash receipts section has five columns and the cash payment section, six columns.

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For cash receipts, the columns are from left to right:

•the date you received the payment;

•your invoice number which has been paid;

•the name of the person who made the payment;

•the amount of the payment;

•the value of what you have paid into the bank.

If you offer discounts for prompt settlement, you will need to have an additional column to show the amount of the discount which was taken.

For cash payments, the columns are from left to right:

•the date you made the payment;

•the cheque number you will have to put on the supplier's invoice when it was received;

•the name of the person or business who has been paid;

•the amount of the payment;

•what you have cashed from the bank for petty cash purposes.

If it is normal business practice to be offered a discount, you need another column to record the amount taken. When you start paying wages, you will need further column to record what you have cashed from the bank for this purpose.

Diagram 3. Cash

Cash receipts

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Keeping the Record Straight

Using the cash book, you should be able to work out how much cash you have and whether cash receipts are exceeding cash payments or vice versa. When you get a bank statement, which should be monthly (and when your business gets more complicated ask for a statement more than once a month), you can check that the two cash balances agree. If they do not, you should be able to identify why, that is, cheques you have sent which have not yet been cashed or cheques you have paid in which have not yet been cleared. This is called a bank reconciliation, it is useful to write your reconciliation down.

All cheque books, paying-in books and bank statements should be carefully kept.

Petty Cash

You can deal with petty cash items in a number of ways. You could write a voucher or piece of paper each time you use petty cash and keep the voucher in the petty cash box. If you get a receipt for money you spend, staple this to the back of the voucher. Once a month, you could tot these up and put them in your purchases record.

Another approach is to carry a little notebook with you and jot down the expenses as they occur. A further alternative is to keep a sheet of paper in your office and write down the amounts spent at the end of each day, again stapling any receipts to it.

Finally, you could set up a recording system in your cash book, using perhaps the back half of the book.

Whichever way you record petty cash items, you need the following information:

•the date the cash was spent;

•how much it was;

•what it was for.

If you are registered for VAT, when you make an entry for your petty cash payments in your purchases record, you will need to know which items include the standard rate of VAT and to work out the amount of VAT you will be claiming.

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Sales

Every time you make a sale, you should produce an invoice (or, if you are selling for cash, a receipt). The invoices should be numbered and filed in numerical order. If there is a fair number of invoices, it might be sensible to have one file for unpaid invoices and another for paid invoices. As every invoice is paid, any documentation which comes with the payment should be stapled to it. It should then be transferred to the paid file. A separate file should be kept for every accounting period to avoid confusion.

The next step is to write down in your accounts or analysis book a record of every sale. For every sale there should be four columns, six if you are registered for VAT.

The columns reading from left to right are:

•the date of the invoice;

•the name of the customer;

•the number of the invoice;

•the amount of the sale, including VAT.

If you are registered for VAT, there should be two further columns:

•the amount of the VAT;

•the amount of the sale, excluding VAT.

Purchases

If your business is simple, you can record the details of purchases in the same accounts or analysis book as your sales, perhaps using the second half of it. As every invoice comes in for goods or services which you have bought (or a receipt for items which you pay cash for), it should be numbered and filed in the numerical order.

When it comes to recording purchases, a more detailed analysis than for sales can be useful for producing the accounts which you need for tax purposes. If your business is simple, your records may need to be updated only once a month.

You will probably find you use all the columns of your analyses book. The columns should read from left to right:

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•the date the invoice is received;

•the name of the supplier;

•whether the invoice is paid or not, for example, a tick if paid;

•the number you put on the invoice;

•the amount of the invoice, including VAT.

If you are registered for VAT, you will need two further columns:

•the amount of the VAT;

•the amount of the invoice, excluding VAT.

The remaining columns of the book should be devoted to showing the nature of the items purchased. The exact headings you put on the columns will depend on the type of the business. Some examples could be stationery, fares, petrol, postage, heating and lighting. The amount of every invoice, excluding VAT if you are registered, should be entered in the appropriate column.

Fixed Assets

If your business is a limited company, you are obliged by law to keep a record of fixed assets. If your businesses is fairly simple, a list in a notebook will suffice. But this should show the cost of the asset and the amount of the depreciation.

VAT

You are required to keep separate VAT accounts if you are registered for VAT. You can put this in your analysis book, if there is sufficient room. This should show for each month:

•the amount of the sales, including VAT;

•the amount of VAT charged;

•the amount of the purchased including VAT;

•the amount of the VAT paid.

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When the Business is more Complicated

There will be many businesses for whom the simple system described above will not be sufficient. This will apply to you if you make many sales or purchases each month and keep a lot of stock on the premises. There will be an increasing number of documents and records needed. Your business may need to set up a system for recording information which includes some or all of the following records.

Purchase Orders

This could be a formal document which has the name and address of supplier plus the goods ordered and the details necessary for that. A copy of your letter may suffice, as long as they are numbered and kept in a file. This document will be needed to ensure that what the supplier sends you is actually what you ordered.

A Record of what Goods are Received in the Business

As your business grows, you will no longer know yourself exactly what has come in; there may well be employees who do this for you. The only way to keep track of what has been received is to have a formal way of recording it. This could be a specially prepared form to fill in and match against the purchase order. Or it could be a book in which you write down the details. Whichever it is, the details are needed before a supplier invoice is passed for payment.

What have you got in Stock?

You need to know at any time what raw materials or finished goods you have got in stock. Going to have a look is not the best way of doing this. Written records are the answer because:

•they are the best way to control and plan your business;

•they will protect against staff pilfering.

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